China's provinces start lifting power prices as producers suffer from surging coal prices Viewpoint 2021-09-13 09:50:53

At least eight provinces in China have adjusted up electricity prices during the peak consumption hours or are mulling to make such rules, in response to operating pressure of coal-fired power plants, some of which are on the verge of bankruptcy.

Supply shortage and increased demand have driven up coal prices in China. Coal-fired power plants have to petition for a rise in power prices to cushion their increasing costs. A large part of electricity prices are fixed by the government.

But electricity price rises have not been allowed since early last year by the National Development and Reform Commission, the country's top economic planning agency, to lower operational burden for end users that had been hit heavily during the pandemic.

Guangxi and Guangdong have announced to revise upwards their peak electricity prices by 20% and 25%, respectively, and Guizhou also raised the electricity rate by 50% for the peak demand hours, with the new policy to take effect from the beginning of October.

Anhui also introduced a policy on a trial basis to increase peak electricity prices by 0.072 per KWh, while Ningxia, Shaanxi, Shandong and Gansu are also drawing a plan to roll out their own policies.

The Beijing Electric Power Industry Association has joined 11 coal-fired power companies in petitioning authorities to raise electricity rates to avoid bankruptcy amid surging coal prices.

The association said last week it had sent a letter to the Beijing Municipal Commission of Urban Management petitioning for increased rates. Five member companies had incurred losses in the first seven months of the year, ranging from 20 million yuan ($3.1 million) to 192 million yuan.

The petition echoed a letter sent by 11 coal-fired power companies within the Beijing-Tianjin-Tangshan power grid last month, which said they were losing money and were on the verge of bankruptcy due to steep increases in coal prices.

The companies said coal prices rose by 65.3% in July compared to a year ago, and by 56.9% in June, while the benchmark price for electricity in the region set by authorities had dropped this year.

Between January and July, electricity consumption beat expectations to increase 15.6% compared to the same period last year, the National Energy Administration said.

(Writing by Alex Guo  Editing by Tammy Yang)
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